Banks Are Still Looking for Cross-sell Effectiveness

By Lee Grice

Millions of Dollars Up For GrabsA recent bank vulnerability study by CG42 researched the projected customer attrition over the next 12 months of the top 10 US Banks. This study concluded that potentially $185 billion in deposits may be at risk for these largest of banks.

Only time will tell if these numbers come to bear, and the reality is that there is some natural attrition of accounts in a normal customer lifecycle. Nevertheless, the banking industry is in the midst of a changing environment with new government regulations and the unusual public relations environment. And banks are continuing to look to improve their servicing of accounts to meet their customer needs and build multiple product relationships to mitigate the risk of attrition.

Direct Mail/ CRM Losing Effectiveness at Worst Possible Time

To retain profitable customers and acquire new customers, many are turning to the direct marketing and Customer Relationship Management technologies they have historically used.

Unfortunately, these tools may not be as effective.

Investment continues to be made in customer cross-sell with diminishing returnsDirect marketing now has multiple channels, including the web, mail, and email. Mass marketing through campaign management still remains the primary process to engage customers and reach new prospects. However, this mass marketing approach has created ‘ad-fatigue,’ with customers receiving too many offers. The result has been a dramatic drop in response rates.

Many banks are adopting the service-to-sale approach.

CRM has underperformed when attempting to increase revenue, profit and attritionCRM solutions have proliferated on the simple premise that a service-to-sale model requires that users need a better understanding of a customer and their needs and desires. Accordingly, financial institutions have invested in CRM applications to help with cross-selling. However, CRM applications have helped more in streamlining and providing process efficiencies than in revenue growth.

In a research note by CRMGuru users responded when asked how their CRM initiatives performed against plan. Notice that CRM deployments delivered much more benefit on the tactical rather than strategic objectives. While the overall measurement may be termed a success, CRM deployments are perceived to fall short of their objectives in improving customer retention, profitability, and revenue.

A significant reason for this is that CRM applications are good at providing a single view of the customer but they overwhelm the user with facts and details, some meaningful, some superfluous. Finding useful information germane to the task at hand is not always achievable in the short window when a service interaction occurs. So, while they appear to create operational efficiencies, CRM applications are lacking in the analytics needed to determine the “next-best-action” for a specific customer.

The time has come for sharper tools. In our next blog, we will describe where we feel the industry is headed.

In his 30+ year career at Equifax, Lee Grice has held numerous roles in information technology, operations, marketing, product management, and most recently, sales. During his time at Equifax, Lee has been awarded multiple patents and contributed articles to industry publications. Lee holds a computer engineering degree from Auburn University, and has completed the Information Technology Management Program at Georgia Tech.[...]

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